On Stocks and the Costanza Paradox

George Costanza: “My life is the opposite of everything I want it to be. Every instinct I have, in every part of life, be it something to wear, something to eat … It’s all been wrong.”

In a classic episode of Seinfeld called The Opposite, perma-loser George Costanza comes to the realization that if he would just act completely contrarily to his own instincts, things would begin to go his way.

Jerry Seinfeld: “If every instinct you have is wrong, then the opposite would have to be right.”

One cannot help but see the parallels between George’s epiphany and the paradox of the high beta market rally that has left even the most experienced players in utter disbelief.

Think about how rewarding it’s been for traders who have completely violated any sense of prudence or market savvy:

*AIG ($AIG) barely avoids liquidation – buy it and enjoy percentage gains in the thousands!

*Unemployment remains at around 10%, inital jobless claims are still climbing – so buy some specialty or even luxury retailers!

*Mortgage rates are inching higher and housing has not truly bottomed – so snag some Hovnanian ($HOV), some lumber names and why not a little Home Depot ($HD).

*Oil breaks out above $85 – and the airlines go wild!

*Congress passes a de facto takeover of Healthcare – OMG!  Healthcare stocks are rallying on the news of their newly subjugated status!

*Commercial RE is a time bomb – REITs!  I gotta have more REITs!

We can document dozens of these types of paradoxical setups.  Investors are taking almost any opportunity to do the opposite of what they’d normally be expected to do.  If everyone in the market is a contrarian, is the true contrarian the non-contrarian?  Heh – “Whaaaaat is the deeeeaal with contrarians?”  Thanks, Jerry.

If Georgie was running a hedge fund right now and abiding by his counterintuitive life strategy, he’d be absolutely killing it.

George Costanza: “I tell you this, something is happening in my life. it’s all happening because I’m completely ignoring every urge towards common sense and good judgment I’ve ever had. This is no longer just some crazy notion. Jerry, this is my religion!”

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

What's been said:

Discussions found on the web
  1. Blue Coaster33 commented on Apr 20

    Thorn of Girl

    Superb information can be identified on this online blog site.

  2. tv online, online tv commented on Apr 23

    Souls in the Waves

    Good Early morning, I just stopped in to go to your site and considered I’d say I loved myself.

  3. stream movies commented on Apr 24

    Third Flower

    My wife and i are already now delighted that Albert could carry out his studies due to the ideas he had by way of your online page. It is actually every so often perplexing to simply often be gifting away ways which some people could have been promotin…

  4. free movie downloads commented on Apr 24

    Woman of Alien

    Best perform you might have finished, this web site is admittedly awesome with amazing information. Time is God’s method of maintaining almost everything from occurring without delay.

  5. water ionizer commented on Apr 25

    Third Flower

    My spouse and that i have been now delighted that Albert could carry out his scientific studies due to the ideas he had by your web content. It’s every so often perplexing to just constantly be giving freely ways which some people might have been mark…

  6. best bottled water commented on Apr 26

    The Ships’s Voyages

    I feel technological innovation just makes it worse. Now there is a channel to never treatment, now there will not likely be a probability for them to discover.

  7. kangen water commented on Apr 30

    The Slave of the Husband

    Searching for ahead to learning extra from you afterward!…

CFT_Banner

Read this next.